Question

1. Economists' attempts to explain the term structure of interest rates

   		illustrate how economists modify theories to improve them when they are inconsistent with the empirical evidence.
   		illustrate how economists continue to accept theories that fail to explain observed behavior of interest rate movements.
   		prove that the real world is a special case that tends to get short shrift in theoretical models.
   		have proved entirely unsatisfactory to date.

Answer 1

Ans illustrate how economists modify theories to improve them when they are inconsistent with the empirical evidence.

Economists' attempts to explain the term structure of interest rates illustrate how economists modify theories to improve them when they are inconsistent with the empirical evidence.